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32Red Plc - 2006 Trading update

32Red Plc - 2006 Trading update


2006 Trading update 13.12.06

32Red Plc, the award-winning online
casino, poker and sportsbetting operator
today provides a trading update on 2006

The 32Red online gaming business has
recovered well in the latter part of
2006 following the slowdown experienced
in the summer. New player sign-ups and
activity levels are pleasing and revenues
from the poker operations have moved
forward especially well.

The Company acquired the loss-making
sportsbetting operator Bet Direct in June
of this year for a total consideration
of £12.5m and trading at Bet Direct has
continued to be difficult over recent
months. As highlighted by other operators
in the industry, the months of October
and November have seen abnormally high
numbers of successful favourites in UK
horseracing markets which has severely
impacted gross win margins experienced
by Bet Direct. The Company entered into a
consultation process with the employees
of Bet Direct on 10th November 2006 and
whilst the outcome of the consultation
is yet to be determined, it is likely
that all or part of the business will be
relocated to Gibraltar. Other plans to
move the Bet Direct business to
profitability continue to be implemented
and the Board firmly believes that Bet
Direct will move into a much improved
cash position in 2007 and will be central
to the 32Red business going forward.

As a direct result of poor trading
experienced at Bet Direct, the Company
anticipates that the combined operating
results for 32Red will fall significantly
below current market forecasts for the
year ending 31st December 2006. The lower
than anticipated EBITDA performance has
resulted in a breach of the
Companys EBITDA covenant with the
Royal Bank of Scotland with whom 32Red
has an outstanding loan of approximately

The Company continues to enjoy a
constructive relationship with its
Bankers and has met all interest and
capital repayments. 32Red Plc has a cash
balance of approximately £5.3m as of the
close of business on 13th December

The Company intends to provide a
further update on 2006 performance during
week commencing 22nd January 2007.

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